Unfortunately, the terminal on OSX is incredibly buggy. Keeps incorrextly coloring commands, randomly failing... Perhaps it's because of the outdated bash they use?
The last thing I remember was that in OS X 10.5 I had to change some locale option to have UTF-8 working properly. But that's it.
Could you give examples where Terminal.app fails?
grep "$search_string" -n -C 3 --color # color bugs out